7.2G Banking
Electronic Fund Transfer (ETF)
A system that allows money transfer instruction to be sent directly to a bank’s computer
system E.g. when business pays salary to employee
Transfer instructions can come from other banks or from businesses.
Cash machines (ATM)
Range of services:
Withdrawing cash
Depositing money
Transferring money between accounts
Paying bills
1. Bank card identifies the customer.
2. Card is read by magnetic strip reader/smart card reader.
3. Customer types secret PIN into the ATMs numeric keypad to confirm owner.
ATMs can be used by customers of other banks as the ATM can use EFT.
If a customer of Bank A uses her debit card to withdraw cash from an ATM belonging to
Bank B:
1. Bank B gives her the cash
2. Bank B now is owed money by Bank A
3. Bank B sends an EFT instruction to Bank A asking for money to be transferred from
the customer’s account to Bank B.
4. Bank B has now been paid back
Internet banking
Customers can access bank account from home using on-line services;
Customers uses a computer and connect to the bank’s secure (encrypted) website where they login
(usually with a username and a password)
Online banking can be used to:
Check the balance of bank accounts
Pay bills
Transfer money between accounts (using EFT)
Apply for loans, or other services
The advantages of internet banking:
More convenient
Saves time and money since you don't have to travel anywhere to use it
Data can be downloaded and analysed / help planning budgets
Disadvantages of internet banking:
Requires a computer and Internet access to use it
Some people prefer to speak to a person (personal service)
If account is hacked, or your username / password is stolen, money could be stolen
from your account
Telephone banking
Requires a phone only
Once you call the bank’s telephone banking number then:
You enter your account number (using the phone's
number keys)
You enter your PIN / secret code
You hear various options
You pick an option
Etc
Customers can use the telephone banking system to:
Check the balance of bank accounts
Pay bills
Transfer money between accounts (using EFT)
Speak to a bank representative to get financial advice
Advantages of telephone banking
You don't need a computer
You can speak to an actual person
Disadvantage of telephone banking
The system can be difficult to use (working through all of those menus)
Processing Cheques (Cheque 'Clearing')
Banks have to deal with thousands of hand-written, paper cheques everyday
To help speed things up, each cheque is passed through an MICR reader that can read the special
numbers that are printed in a special font using magnetic ink.
The hand-written cheque can be entered into the computer system by either using a human to read
the writing and typing the data in, or by using OCR.